European shares end little changed

Sanofi-Aventis gains as profit rises 29%

By

SarahTurner

LONDON (MarketWatch) -- European markets ended little changed Tuesday, as upside from solid corporate earnings and gains in mining and auto stocks was countered by declines in chemical and utility stocks and a lower start to U.S. trading.

The German Xetra DAX 30 index ended down 0.3% at 5,008, pressured by declines in utility stocks such as RWE (703712) and E.ON (761440) and chemical companies including Lanxess (547040).

The French CAC 40 index (1804546) ended flat at 4,503, while the U.K.'s FTSE 100 index (UKX), also finished flat at 5,460. See London Markets.

The broader pan-European Dow Jones Stoxx 600 added 0.05% at 296.81.

In currency markets, the euro traded at two-year lows vs. the dollar, and was recently down 0.2% at $1.1769. The move reflected a combination of optimism for U.S. economic prospects and concerns over spreading riots in Europe. See Currencies.

The unrest in Europe began in France thirteen days ago and has just started to spread to Belgium and Germany.

French Interior Minister Nicolas Sarkozy said on Tuesday that the government has authorized local officials to impose curfews under a state of emergency law in a bid to quell the uprising, the Associated Press reported.

Meanwhile, crude-oil futures were recently down 22 cents at $59.25. See full story.

The weakness in the euro and oil gave a boost to automakers such as Volkswagen (766400) and DaimlerChrysler (710000), up 1.1% and 0.5% in Frankfurt.

Optimism was also buoyed by strategists at Deutsche Bank, who said that European equity markets may be on route to their best yearly performance since 1999.

"Equity markets gained faith again over the course of last week as global growth remains solid,...third-quarter reporting is positive on both sides of the Atlantic, oil prices are roughly 15% off their highs, and equity-market valuation remains attractive, even taking into account higher bond yields," the bank noted.

Utilities have been hit by rising bond yields, Deutsche Bank noted, at the same time as it moved its stance further out from chemical stocks and into oil companies.

Turning to individual European stocks, French drug maker Sanofi-Aventis
SNY, -0.84%
(012057) stood out among risers.

It ended up 1.6% after posting a 29% rise in adjusted third-quarter profit as merger savings and sales of the Plavix stroke medication and Lovenox blood-thinning drug offset declining sales of allergy drug Allegra. See full story.

Another healthcare riser was Europe's leading biotech, Serono SA
SRA, +0.00%
which surged about 8% in Swiss trading. The firm said it has retained Goldman Sachs to consider its strategic alternatives.

Given Serono's size and an additional market premium, only some of the world's biggest players could afford the company, including the likes of Switzerland's Novartis AG
NVS, -1.15%
and New York's Pfizer Inc.
PFE, -0.59%
which already helps market Serono's multiple-sclerosis drug, Rebif, according to news reports. See full story. Novartis added 0.3% in Swiss trade.

Elsewhere, Anglo-Caribbean telecom Cable & Wireless (CW)
CWP, +0.73%
ended up 1.9% after it posted a fall in first-half net profit of 48% to 125 million pounds ($217 million), which was less than expected. The group blamed the fall in profit on its corporate business and losses at its Bulldog consumer broadband unit. See full story.

And shares in financial services company Man Group (EMG) also got a lift in the U.K. after Dresdner Kleinwort Wasserstein said that the stock could offer 20% upside in the longer-term.

"Man Group is well positioned in two of the growth markets in financial services: hedge fund management and derivatives brokerage," DrKW said.

Man shares ended up 2.3%.

Meanwhile, natural gas explorer and producer BG Group (BG)
BRG, +2.23%
slid 0.2% after it said third-quarter earnings rose 50% to 321 million pounds, revenue increased 25% to 1.36 billion pounds on rising energy prices and production, and that it's planning to return up to 1 billion pounds to shareholders via buybacks in the next 12 to 18 months.

And French insurance giant AXA
AXA, -0.26%
(012062) dropped 2% after it said nine-month life and savings new business rose 8% to 3.77 billion euros, helped by increases in Japan, the United Kingdom, Belgium, Hong Kong, the U.S. and Australia.

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